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NFT: Any Suggestions from BBI Estate Planner Gurus

bhill410 : 2/20/2018 2:58 pm
Thanks in advance for any suggestions.

Situation is this - There is this lake front camp that my wife’s family has been going to her whole life. Back in 1980 the land was converted from rentals to a condo association with all ten cabins being association members.
Within the original bylaws was a provision that any association members had a right of first refusal on cabins for sale (unless sale was to a blood relative).

One of the cabins recently came up for sale and was sold to a non-association member; as a result all of the ten owners now have a right of first refusal on the asking price. My mother in law is an association member but we are not. As a result, since my wife desperately wants to own a cabin (lucky me), we have to now make any offers through my mother in law. What I am trying to figure out is how do we give the money to my mother in law to buy it and then transfer the deed over to us without implicating any sort of crazy tax laws. Not sure if it is relevant but we will be paying cash so no mortgage implications or the like.

If it gets to the point where our bid is the winning offer I will obviously be working with a real estate attorney, but because it would be a local Mainer I kind of wanted to have an idea of transfer options prior to that discussion because who knows what their skill level will be.
One idea  
bigbluehoya : 2/20/2018 3:26 pm : link
Advance her the money as a loan. Draw up a loan agreement and etc.

Have her close on the purchase, and sell it to you the next day. On the closing statement for the purchase from your MIL, you get a credit for repayment/satisfaction of the loan, so no cash (or only some small amount) is due, and no taxable gain to your MIL.

Disclaimer that I’m neither a lawyer nor a tax/estate professional.
I'm confused  
gidiefor : Mod : 2/20/2018 3:32 pm : link
are you looking for Estate Planning advice or Real Estate transaction advice?
Gidiefor I am honestly not sure  
bhill410 : 2/20/2018 3:55 pm : link
The question struck me as one from an estate planner but if its more a real etsate question that could also make sense. The area of law I practice is so far removed from real estate, I really have no idea if real estate attorneys deal with issues of this nature. There is this bizzaro clause that is forcing me to facilitate something that seems like it would be more of an estate issue rather than a normal real estate question.
Wouldn't the answer depend  
Matt M. : 2/20/2018 4:31 pm : link
on whether you want the ownership to change hands prior to or after your mother-in-law's death? Or are you trying to determine which is more advantageous to you in regards to taxes?
Not really to your question  
steve in ky : 2/20/2018 4:51 pm : link
and just a thought you may want to not even consider. But have you looked at any other lake houses (cabins) for a comparison? I'm sure your wife has an attachment to that spot, which of course is a factor, but I wouldn't blindly bid on a house without first comparing what else you might be able to buy for the same investment. You may find something you both like much better, or at the very least reinforce that you are making the right choice if you don't.
Hi Matt - we are essentially paying for it ourselves  
bhill410 : 2/20/2018 5:18 pm : link
but because of this dumb provision in the bylaws the actual purchase needs to be made by my mother in law. I believe we can be on the deed with her, but in order to not exposure us to litigation by a fellow condo association member I would think that at a minimum she would have to be on it at time of closing. I am trying to figure out how to subsequently get her removed after.
Since a sale to a blood relative is in the bylaws  
steve in ky : 2/20/2018 5:26 pm : link
Why not "help" her buy it and be on the deed with her. Then after a long enough period of time to where it wouldn't likley cause other members to complain just have her "sell" you and wife her share as her blood relative.
_________  
I am Ninja : 2/20/2018 6:02 pm : link
from a real estate attys prospective, the legalities of the transaction are easy. make sure there are no bylaws or covenants prohibiting the 2nd conveyance. the more tricky issue (though prob not for a tax pro) are the tax implications. consult with both.
It appears that the ethical choice is to inform the association  
Marty in Albany : 2/20/2018 6:03 pm : link
of your intentions rather than try to trick and/or fuck the other association members.
bhill  
gidiefor : Mod : 2/20/2018 8:12 pm : link
I don't see Estate issues here. What I see is a transaction that involves family and a community of people that know each other really well. It's never easy to tie a neat package out of a family transaction because feelings and family bonds are involved, and the same is true of a tight knit community.

I understand what would make one nervous going into a situation like this.

I represent a campground that operates on a similar basis. This is either going to work because everyone involved wants it to work - or it's going to be a nightmare. There is no way to 100% legally protect yourself when it comes to these things. Some of it is going to have to be based on faith.

I advise you to become real familiar with the camp's legal structure and then make a point to meet with some of the principals and tell them what you have in mind. That will give you a strong indication of which way the wind is blowing on this. I would ask them for advise on how to proceed.

The bottom line is, you are contemplating living amongst these people, and owning part of what they are. They can make things a lot easier for you - or visa versa - and the same goes with your mother in law.
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